Investors Like the News From priceline

priceline ( PCLN) was markedly higher Friday, as investors saw good news in its hotel business and in its plans to ask for a reverse split.

In recent trading, shares of the online travel site were up 66 cents, or 28.1%, to $3.04.

On Thursday the company said that for the first quarter of 2003, it posted negative net income of $8 million, or 4 cents a share. Last year, the company posted a $3.9 million profit equivalent to 2 cents a share.

The loss reflects a charge of $6.9 million for the issuance of warrants to Marriott ( MAR) to purchase priceline.com common stock, and a preferred stock dividend.

Without those charges, priceline.com would have broken even for the quarter. The first-quarter pro forma number slightly bests analysts' estimates for an EPS loss of a penny.

But the company's hotel-room business was up substantially both sequentially and over the year-ago quarter.

priceline.com also said it will seek shareholder approval for a reverse stock split at a ratio that ranges from 1 for 6 to as high as 1 for 9 shares. The split would have the effect of reducing the number of shares from 230 million to between 25 million and 37.5 million.

"We believe this reverse split will expand investor interest in priceline.com, reduce transaction costs for trading our common stock, make our results more comparable to peer companies that have far fewer outstanding shares than we currently have, and allow priceline.com's earnings per share, on a post-split basis, to more precisely reflect the company's operating results," said CEO Jeffery Boyd.

In a note Friday morning, Legg Mason Wood Walker analyst Thomas Underwood predicted the reverse split would be well received, saying it would make priceline shares more attractive to a larger group of investors. (Legg Mason has no banking relationship with priceline.)